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DEPARTMENT 205 LAW AND MOTION RULINGS



Case Number: 22SMCV01939    Hearing Date: June 13, 2024    Dept: 205

 

 

 

Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

SAMRON & ASSOCIATES, et al.,   

 

Plaintiff, 

v. 

 

3523 GREENFIELD, LLC, et al.,  

Defendants. 

 

  Case No.:  22SMCV01939 

  

  Hearing Date:  June 13, 2024 

  [TENTATIVE] ORDER RE: 

  PLAINTIFF'S MOTION TO COMPEL  

  ALVARO CASTILLO, TO ANSWER,  

  SPECIAL INTERROGATORIES,  

  WITHOUT OBJECTIONS AND FOR  

  SANCTIONS, COSTS AND ATTORNEYS’  

  FEES OF $752.82 AGAINST CASTILLO  

  AND HIS COUNSEL 

 

 

BACKGROUND 

This action arises from alleged construction defectsPlaintiff Samron & Associates (“Samron”) purchased a remodeled single-family residence from Defendant 3523 Greenfield, LLC (“Greenfield”)The home is located at 3523 Greenfield Ave, Los Angeles, California (the “Property”). 

Plaintiff alleges numerous defects with the constructionPlaintiff alleges Defendant Alvaro Castillo was involved in the hiring of several unskilled and unlicensed “contractors” who participated in the construction of their homePlaintiff has added these various contractors as defendants in this action.   

On February 29, 2024, Plaintiff e-mail served Castillo with special interrogatories designed to determine a good address for service of process for the various individuals and small companies who were added as defendants in the action.  Responses to the interrogatories were due by April 1, 2024Castillo did not answer the interrogatories.     

On April 11, 2024, Plaintiff’s counsel sent a letter to Castillo’s counsel demanding answers to the special interrogatoriesCastillo’s counsel never responded.   

This hearing is on Plaintiff’s motion to compel Castillo to respond to special interrogatories without objectionsPlaintiff also seeks $752.82 in sanctions.   

LEGAL STANDARD 

A motion to compel an initial response can be made on the ground that a party did not serve a timely response to interrogatories. (Code Civ. Proc., § 2030.290, subd. (a); see¿Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 404.)   Failing to timely respond waives any objections. (CCP § 2030.290(a).) 

To move to compel initial responses, a movant must show: (1) proper service (see¿Code Civ. Proc., § 2030.080, subd. (a)); (2) expiration of the deadline for the initial response, 30 days after service or on date agreed to by the parties (see¿Code Civ. Proc., § 2030.260, subds. (a),¿(b)); and (3) no timely response (see¿Code Civ. Proc., § 2030.90). 

There is no “meet and confer” requirement where there is a total failure to respond to discovery(Sinaiko, 148 Cal.App.4th at 411.)  There is also no separate statement requirement for a motion to compel initial responses(Cal. Rules of Court Rule 3.1345(b).) 

Where the court grants a motion to compel responses, sanctions shall be imposed against a party, person, or attorney who unsuccessfully makes or opposes a motion to compel, unless the person or entity acted with substantial justification or the sanction would otherwise be unjust. (Code Civ. Proc., §§ 2030.290, 2031.90, 2033.280, subds. (c);¿Cal. Rule of Court, rule 3.1348.)  In addition, the court may award sanctions for any misuse of discovery process(Code Civ. Proc. §§ 2023.010¿and¿2023.030.)  A failure to timely respond constitutes a misuse of the discovery process(Code Civ. Proc, § 2023.010, subd. (d).)¿ 

DISCUSSION 

All the requirements for a court order compelling a party to answer discovery have been met herePlaintiff properly served Castillo with special interrogatoriesThe deadline to respond was April 1, 2024Castillo failed to timely respondAccordingly, he has waived all objections and must respond to the special interrogatories without objections. 

The Court further concludes sanctions are warranted given Castillo’s misuse of the discovery process in failing to timely respondIn calculating the amount of sanctions, the Court starts with the lodestar which is the reasonable hourly rate multiplied by the reasonable hours expended.   

Plaintiff’s counsel bills at an hourly rate of $450, but there are no further facts to support the reasonableness of his rateCounsel does not specify how long he has been in practice, and accordingly, the Court cannot conclude whether his rate is reasonable for an attorney of similar experience in the prevailing marketCounsel also does not state whether his hourly rate has been approved by other CourtsAccordingly, the Court will use an hourly rate of $250.     

As to the time expended, the Court concludes that 1.5 hours to prepare the motion is reasonablePlaintiff also seeks costs of $77.82 for filing fees which the Court also concludes is reasonable.   

CONCLUSION 

Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion to compel responses to special interrogatories and for sanctions.  Sanctions in the amount of $452.82 is awarded against Castillo and his counsel, jointly and severally.     

 

IT IS SO ORDERED. 

 

DATED: June 13, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court 


Case Number: 22SMCV01951    Hearing Date: June 13, 2024    Dept: 205

HEARING DATE:  June 13, 2024 

JUDGE/DEPT:  Moreton/Beverly Hills, 205 

CASE NAME: Brian Whitaker v. Promenade Property LP 

CASE NUMBER:  23SMCV01450 

 

COMP. FILED:  October 17, 2022 

 

 

 

PROCEEDINGS: REQUEST FOR ENTRY OF DEFAULT JUDGMENT 

MOVING PARTY: Brian Whitaker  

RESPONDING PARTY: Promenade Property LP, Promenade Property LLC and Young Kim 

 

BACKGROUND 

This case arises from alleged violations of the Unruh Civil Rights Act (the “Unruh Act”) and the California Disabled Persons ActPlaintiff Brian Whitaker is substantially limited in his ability to walkHe is a quadriplegic and uses a wheelchair for mobility.   

On August 21, 2022, Plaintiff went to the Wetzel’s Pretzels Restaurant, which is located at 1403 3rd Street Promenade, Santa Monica, California (the “Property”).  Defendants Promenade Property LP and Promenade Property LLC own the real property, and Young Kim owns the restaurant at the PropertyPlaintiff claims the restaurant is not accessible to wheelchair users because there is no counter that was 36 inches or less in height and there was no level landing at the entrance and in front of the sales counter.   

Plaintiff filed the Complaint on October 17, 2023 which seeks injunctive relief requiring Defendant to provide wheelchair-accessible sales counters and paths of travel at the restaurant, in compliance with the Americans with Disabilities Act Accessibility Guidelines (or “ADAAG”)The Complaint also seeks damages under the Unruh Act including the statutory minimum of $4,000 per violation; and attorney’s fees and costs pursuant to Cal. Civ. Code section 52.   

Plaintiff filed a proof of service showing Defendant Young Kim was substitute served on November 10, 2022 and Defendants Promenade Property LP and Promenade Property LLC were served personally through the California Secretary of State on July 19, 2023.  Defendants were obligated to respond within 30 days Defendants did not do so.  Plaintiff successfully requested the entry of Defendants default, which was entered by the Clerk’s Office on September 6, 2023, September 18, 2023 and February 20, 2024Plaintiff requested a default judgment on April 8, 2024Plaintiff served Defendants by mail with both the Request for Entry of Default and Request for Default JudgmentDefendants have not appeared. 

 

RELIEF REQUESTED 

 

Default judgment against Defendants for a total of $13,081.98, which is comprised of: (1) $4,000 in statutory damages, (2) $7,660 in attorneys’ fees, and (3) $1,421.98 for costs.  Plaintiff also seeks injunctive relief requiring Defendants to provide accessible sales counters and paths of travel at the restaurant in compliance with the ADAAG.   

   

ANALYSIS 

 

Code of Civil Procedure section 585 sets forth the two options for obtaining a default judgment. First, where the plaintiffs complaint¿seeks compensatory damages only, in a sum certain which is readily ascertainable from the allegations of the complaint or statement of damages, the clerk may enter the default judgment for that amount. However, if the relief requested in the complaint is more complicated, consisting of either nonmonetary relief, or monetary relief in amounts which require either an accounting, additional evidence, or the exercise of judgment to ascertain, the plaintiff must request entry of judgment by the court. In such cases, the plaintiff must affirmatively establish his entitlement to the specific judgment requested.¿ (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 287.)  Section 585 also allows for interest, costs and attorney fees, where otherwise allowed by law. (Code of Civ. Proc. section 585(a).) 

 

Multiple specific documents are required, such as: (1) form CIV 100, (2) a brief summary of the case; (3) declarations or other admissible evidence in support of the judgment requested; (4) interest computations as necessary; (5) a memorandum of costs and disbursements; (6) a proposed form of judgment; (7) a dismissal of all parties against whom judgment is not sought or an application for separate judgment under CCP § 579, supported by a showing of grounds for each judgment; (8) exhibits as necessary; and (9) a request for attorneys’ fees if allowed by statute or by the agreement of the parties.  (CRC Rule 3.1800.)  

Here, Plaintiff has properly complied with all the substantive and procedural requirements for a default judgment Substantively, Plaintiff has stated a statutory basis for his claim for damages and attorneys’ feesA memorandum of costs in the amount of $1,421.98 is set forth in Item 7 of the CIV-100 form.  Plaintiff has filed a declaration in support of his request for attorneys’ feesThe fees are in excess of the default method for determining attorneys’ fees pursuant to Local Rule 3.214, but Plaintiff argues they are reasonable under the lodestar method.   

A lodestar figure is calculated by multiplying the number of hours spent by a reasonable hourly rateThe hourly rates charged by Plaintiff’s counsel have been found reasonable by other courts(See, e.g., Lindsay v. Grupo Glemka, 2:18-cv-05136-MRW (C.D. Cal. July 19, 2019).)  However, there is no adequate explanation as to the amount of time spent (42.7 total hours, 21.4 hours by attorneys and 21.3 hours by paralegals).  There are 7 attorneys and 17 paralegals who worked on the caseThere is no reason why such a simple case requires this type of overstaffingThe Court will only award 10 hours of attorney time at an hourly rate of $400, and 10 hours of paralegal time at an hourly rate of $100, for a total of $5,000            

Otherwise, Plaintiff properly served Defendants more than 30 days prior to requesting entry of default and default judgment, correctly completed JC Form CIV-100 in a manner that would not void or put at issue the entry of default, provided a declaration of non-military status, dismissed all fictitious defendants, requested damages in amounts supported by the filings and not in excess of the amount stated in the Complaint, and filed a proposed judgment (JUD-100).   As default has already been entered and there has been no appearance or filing whatsoever from Defendants, default judgment is appropriate here.  ¿ 

CONCLUSION AND ORDER  

 

For the foregoing reasons, Plaintiff Brian Whitaker’s Request for Default Judgment is GRANTED IN PART and DENIED IN PARTDefault judgment in the amount of $10,421.98 is awarded in favor of Plaintiff.   


Case Number: 23SMCV00914    Hearing Date: June 13, 2024    Dept: 205

 

 

 

Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

RAMAN NOURIZAD, et al.,  

 

Plaintiffs, 

v. 

 

AMERICAN HONDA MOTOR COMPANY, INC., et al. 

 

Defendants. 

 

  Case No.:  23SMCV00914 

  

  Hearing Date:  June 14, 2024 

  [TENTATIVE] ORDER RE: 

  DEFENDANTS MOTION TO  

  COMPEL ARBITRATION AND  

  STAY ACTION 

 

 

 

BACKGROUND 

 

  This case arises from a dispute over an allegedly defective Honda OdysseyPlaintiffs Raman Nourizad and Maytal Nourizad leased a new 2018 Honda Odyssey which was manufactured and/or distributed by Defendant American Honda Motor Co., Inc. (“AHMC”). (Compl. ¶ 6.)  Plaintiffs entered into a written warranty contract with AHMC which included bumper-bumper warranty, powertrain warranty, and emission warranty(Compl. ¶6-7.)   

During the warranty period, the car contained or developed defects including a defective infotainment system, seat belts, electrical systems, engine and body(Compl. ¶ 11.)  Plaintiffs provided AHMC and its representatives an opportunity to service or repair the car(Compl. ¶ 23.)  AHMC was unable and/or failed to service the car within a reasonable number of attempts(Compl. ¶ 26.)  

The operative complaint alleges claims for (1) violation of Civil Code Section 1793.2(d), (2) violation of Civil Code Section 1793.2(b), (3) violation of Civil Code Section 1793.2(a)(3), (4) breach of the implied warranty of merchantability, in violation of Civil Code Sections 1791.1, 1794 and 1795.5, and (5) fraudulent inducement-concealment.       

Plaintiffs leased the car pursuant to a closed-ended motor vehicle lease agreement (the Agreement”)(Ex. 1 to Hartmann Decl.The Agreement contains an arbitration provision that requires binding arbitration of “any dispute between YOU, HONDA or any involved third party relating to your account, this Lease or our relationship including any application, the Vehicle, its performance and any representation, omissions or warranties.”  (Id.)  “HONDA” is defined to include AHMC.  (Id.) 

This hearing is on AHMC’s motion to compel arbitrationAHMC argues that while it is a non-signatory to the Agreement, it is entitled to enforce the arbitration provision as a third party beneficiary.   

LEGAL STANDARD 

The¿Federal Arbitration Act (“FAA”)¿applies to contracts that involve interstate commerce (9 U.S.C. §§ 1,¿2), but since arbitration is a matter of contract, the¿FAA¿also applies if it is so stated in the agreement.  (See¿Victrola 89, LLC v. Jaman Properties 8 LLC¿(2020) 46 Cal.App.5th 337, 355 [260 Cal. Rptr. 3d 1]¿(“[T]he presence of interstate commerce is not the only manner under which the¿FAA¿may apply. … [T]he parties may also voluntarily elect to have the¿FAA¿govern enforcement of the Agreement”].)   

Here, the arbitration provision in the Lease Agreement states, “YOU and HONDA agree and acknowledge that this Lease affects interstate commerce and the Federal Arbitration Act (FAA) applies.”  (Ex. 1 to Hartmann Decl.)The language of this provision is unambiguous: the parties specified that the¿FAA¿governs the arbitration agreement.¿(Cf.¿Victrola 89, LLC, 46 Cal.App.5th at pp. 343, 348¿(contracting parties explicit “reference to ‘enforcement’ under the¿FAA required the court to consider the [defendants] motion to¿compel arbitration under the¿FAA.).) 

Under the FAA, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration …”Moses H. Cone Memorial Hospital v. Mercury Constr. Corp.¿(1983) 460 U.S. 1, 24–25.  This federal policy favoring arbitration preempts any state law impediments to the policys fulfillment.  If a state law interferes with the FAAs purpose of enforcing arbitration agreements according to their terms, the FAA preempts the state law provision, no matter how laudable the state laws objectives. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352.)   

However, while the arbitration agreement here is governed by the FAA, the agreement may be enforced via the summary procedures provided by California arbitration law(Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal. 4th 394, 409-410.)  It is a general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts, even though the controversy is governed by substantive federal law.  (Felder v. Casey¿(1988) 487 U.S. 131, 138.)  By the same token, however, a state procedural rule must give way if it impedes the uniform application of the federal statute essential to effectuate its purpose, even though the procedure would apply to similar actions arising under state law. (McCarroll v. L.A. County etc. Carpenters¿(1957) 49 Cal. 2d 45, 61, 62.)   

We think it plain¿the California procedures for a summary determination of the petition to compel arbitration serve to further, rather than defeat, the enforceability policy of the [FAA.]” ¿(Rosenthal, 14 Cal. 4th at 409.)  Code Civ. Proc. § 1281.2 and¿1290.2¿are neutral as between state and federal law claims for enforcement of arbitration agreements.  (Id.They display no hostility to arbitration as an alternative to litigation; to the contrary, the summary procedure provided, in which the existence and validity of the arbitration agreement is decided by the court in the manner of a motion, is designed to further the use of private arbitration as a means of resolving disputes more quickly and less expensively than through litigation.”  (Id.) 

As with federal law, under California¿law,¿public policy favors arbitration as an efficient and less expensive means of resolving private disputes(Moncharsh¿v.¿Heily¿&¿Blase¿(1992) 3 Cal.4th 1, 8-9;¿AT&T Mobility LLC v. Concepcion,¿563 U.S. at 339.)¿ To further that policy, Code Civ. Proc. §1281.2 requires a trial court to enforce a written arbitration agreement unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for rescission of the agreement or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.    

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by a preponderance of evidence.¿ (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.)¿ It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions.¿ (Gamboa, 72 Cal.App.5th at 165.)¿ The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause.¿ (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.)  The trial court then weighs all the evidence submitted and uses its discretion to make a final determination.¿ (Id.)¿  

If the court orders arbitration, then the court shall stay the action until arbitration is completed.¿ (See Code Civ. Proc., § 1281.4.)  

REQUEST FOR JUDICIAL NOTICE 

Plaintiffs request judicial notice of the following opinions:  (1) Ford Motor Warranty Cases (Cal. Ct. App. Apr. 4, 2023) 89 Cal.App.5th 1324 (“Ochoa v. Ford”), (2) Montemayor et al. v. Ford Motor Company, 92 Cal.App.5th 958 (Cal. Ct. App. June 26, 2023) (“Montemayor”), (3) Kielar v. The Superior Court of Placer County, 94 Cal.App. 5th 614 (Cal. Ct. App. August 16, 2023) (“Kielar”), (4) California Court of Appeal, Third Appellate District’s August 28, 2023 Response to Petition for Writ of Mandate in Campos et al. v. The Superior Court of Butte County, No. C098848, (5) California Court of Appeal, Third Appellate District’s August 28, 2023 Response to Petition for Writ of Mandate in Ortiz et al. v. The Superior Court of Sacramento County, No. C099135, and (6) Yeh v. Superior Ct. of Contra Costa Cnty., 95 Cal.App.5th 264 (Cal. Ct. App. Sept. 6, 2023) (“Yeh”)The Court denies the requestThere is¿no need to seek¿judicial notice of court opinions, at least when they are statements of domestic law; the requesting party can simply cite the cases(See, e.g., Mangini v. R J. Reynolds Tobacco Co. (1994) 7 Cal. 4th 1057, 1064,¿overruled on other grounds by¿In re Tobacco Cases II (2007) 41 Cal. 4th 1257.)¿ 

DISCUSSION 

Existence of an Agreement 

In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law  help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.)¿¿  

Although “[t]he law favors contracts for arbitration of disputes between parties” (Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal.App.3d 526, 534), “there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate[.]” (Weeks v. Crow (1980) 113 Cal. App. 3d 350, 353..)¿ “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 648 (citations and internal quotations omitted); see also Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1518¿(“Because arbitration is a contractual matter, a party that has not agreed to arbitrate a controversy cannot be compelled to do so”).)¿¿¿¿¿¿¿  

Here, Plaintiff signed the Agreement which contains an arbitration provisionThe arbitration provision was clearly titled and stated in bold “PLEASE READ THIS ARBITRATION PROVISION CAREFULLY TO UNDERSTAND YOUR RIGHTS BY ELECTING ARBITRATION, YOU AGREE THAT ANY CLAIM YOU MAY HAVE IN THE FUTURE MUST BE RESOLVED THROUGH BINDING ARBITRATIONYOU WAIVE THE RIGHT TO HAVE YOUR DISPUTE HEARD IN COURT AND WAIVE THE RIGHT TO BRING CLASS CLAIMSYOU UNDERSTAND THAT DISCOVERY AND APPEAL RIGHTS ARE MORE LIMITED IN ARBITRATION.”  (Ex. 1 to Hartmann Decl.)   

The arbitration provision provides that by signing, Plaintiff elects to have “Claims” resolved by binding arbitration“Claims” means “any dispute between YOU, HONDA or any involved third party relating to your account, this Lease, or our relationship, including any application, the Vehicle, its performance and any representations, omissions or warranties.”  (Id.)  “HONDA” is defined to include AHMC(Id.)   

Plaintiff signed the Agreement and initialed Paragraph 15 of the Agreement which states: “The parties agree that any unresolved disputes shall be submitted to arbitration in accordance with the Arbitration clause (Section 52)By initialing this Section, I am confirming that I have read this Section and the Arbitration clause.”  (Id.)     

Accordingly, the Court concludes AHMC has met its burden to demonstrate the existence of a valid arbitration agreement.  

AMHC’s Right to Enforce Agreement 

An entity seeking to compel arbitration must generally establish it was a party to an arbitration agreement. (DMS Services LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352–1353; JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236.)  Only in limited circumstances may an arbitration agreement be enforced by non-signatories.   

One such circumstance is where a benefit is conferred on the non-signatory as a result of the agreement, making the non-signatory a third party beneficiary of the arbitration agreement. (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301.)  “To invoke the third party beneficiary exception, [a third party beneficiary] ha[s] to show that the arbitration clause … was made expressly for [its] benefit.” (Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838.)   

Here, the arbitration agreement provides for the arbitration of disputes between Plaintiff and “HONDA,” and “HONDA” is defined to include AHMC(Ex. A to Dao Decl.)  Accordingly, AHMC is an express third party beneficiary to the arbitration agreement and may enforce it(Cione v. Foresters Equity Servs., Inc. (1997) 58 Cal.App.4th 625, 636-37 (non-party to the arbitration agreement who was expressly named in the arbitration agreement was a third party beneficiary).)   

Plaintiffs cite to cases holding that a non-signatory manufacturer cannot invoke the arbitration provision in a lease agreement because a warranty claim against a manufacturer is not inextricably intertwined with a lease agreement(Opp. at 2-4.)  But the leading case Plaintiffs cite specifically distinguishes the situation here where AHMC is an expressly named third-party beneficiary of the arbitration provision in Plaintiffs’ lease agreement In Ford Motor Warranty Cases (2023) 89 Cal.App.5th 1324, the court stated that the manufacturer, Ford Motor Company (“FMC”), could not enforce the arbitration provision at issue because it was not named in the contract, and was therefore not an intended beneficiary of the contractHowever, the Court specifically stated that the result would be different and arbitration could be compelled by the manufacturer, if the manufacturer had been expressly named in the arbitration provision(Id. at 1339.)  The Court stated that “[i[f the signatories had intended to benefit FMC, such a purpose would have been easy to articulateThey could have simply named FMC—directly or by class as the vehicle’s manufacturer—as a person entitled to compel arbitrationBut they did not.”  (Id.)  That is exactly what the lease agreement here does – it expressly names AHMC as a party that is entitled to enforce the arbitration provision in the lease agreement.  

Arbitrability of Dispute 

 The Court next considers who should decide the arbitrability of the dispute, i.e., whether the arbitration provision encompasses the claims asserted by Plaintiff.  “Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance under the FAA [citation], the ‘[p]arties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions regarding the enforceability of the agreement.’” (Pinela v. Neiman Marcus Group, Inc.¿(2015) 238 Cal.App.4th 227, 239.)¿  

 “There are two prerequisites for a delegation clause to be effective.¿First, the language of the clause must be clear and unmistakable. [Citation.]¿Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.” (Tiri v. Lucky Chances, Inc.¿(2014) 226 Cal.App.4th 231, 242; see also¿Rent-A-Center, 561 U.S. at 68, 69, fn. 1.)¿The “clear and unmistakable” test reflects a “heightened¿standard of proof” that reverses the typical presumption in favor of the arbitration of disputes. (Ajamian v. CantorCO2e, L.P.¿(2012) 203 Cal.App.4th 771, 787.) 

Here, the arbitration provision states the arbitrator shall “decide all issues relating to the interpretation, construction, enforceability and applicability of this provision.”  (Ex. 1 to Hartmann Decl.)  This language delegates to the¿arbitrator questions of¿arbitrability and is clear and unmistakable evidence that the parties intended to arbitrate¿arbitrability. (See, e.g.,¿Malone v. Superior Court¿(2014) 226 Cal.App.4th 1551, 1560¿(delegation clause that provided “[t]he arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement” was clear and unmistakable agreement to arbitrate the question of arbitrability);¿Momot v. Mastro¿(9th Cir. 2011) 652 F.3d 982, 988¿(language that delegated authority to arbitrator to determine “the validity or application of any of the provisions of” the arbitration clause was a clear and unmistakable agreement to arbitrate the question of arbitrability).) 

Accordingly, the Court defers to the arbitrator the question of whether Plaintiff’s claims are within the scope of the arbitration agreement.   

Waiver 

Plaintiffs argue AHMC has waived its right to arbitrate the disputeThe Court disagrees. 

Plaintiffs argue that AHMC could have filed its motion in July 2023 when Plaintiffs provided a copy of the lease agreement, and thus AHMC unreasonably delayed nearly a year to file the motion to compel arbitration (in May 2024.)  But Plaintiffs produced only a portion of the lease agreement which did not contain the operative arbitration provision(Ex. 3 to Hartmann Reply Decl.)  AHMC received a complete copy of the lease agreement from the dealer on May 3, 2024 and filed its motion to compel arbitration and stay action on May 10, 2024(Harmann Reply Decl. 2.)  Accordingly, there was no unreasonable delay. 

The parties dispute whether waiver can occur in the absence of prejudicePlaintiffs argue that unreasonable delay alone can support a finding of waiver, and there is no requirement to show prejudiceMeanwhile, AHMC argues that the presence or absence of prejudice is a determinative issueThe Court need not resolve this dispute as it concludes there was no unreasonable delay. 

Plaintiffs also argue that AHMC waived its right to compel arbitration because it participated in brief discoveryThe basic rule in California is that waiver does not occur by mere participation in litigation. (Keating v. Superior Court (1982) 31 Cal.3d 584, 605.).  For waiver to occur as the result of participation in litigation, “there must be judicial litigation of the merits of arbitrable issues.” (Id.) The mere service of discovery, without obtaining any information about the other side’s case that could not have been gained in arbitration, does not constitute waiver of arbitration. (See, e.g. St. Agnes Medical Center v. PacificCare of Cal. (2003) 31 Cal.4th 1187, 1195.)  

Here, AHMC has only served limited discovery requests, seeking repair records and the information allowing it to determine if an enforceable agreement to arbitrate exists.  (Ex. B to Hartmann Reply Decl.Further, AHMC’s responses to Plaintiffs’ discovery requests specifically state that AHMC will be filing a Motion to Compel Arbitration and that AHMC will not respond to discovery on the merits until the motion is resolved (Ex. C to Hartmann Reply Decl.)  There is no claim that AHMC attempted to take discovery not otherwise available in arbitrationAccordingly, AHMC did not act in any way fundamentally inconsistent with the right to compel arbitration.   

Unconscionability 

The Court must next consider whether the arbitration agreement is unconscionableUnconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.)  Unconscionability has both a “procedural” and a “substantive” element(A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.)  An agreement to arbitrate is unenforceable only if both procedural and substantive unconscionability is shown. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.)   

Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. (Id. at 1280.)  Substantive unconscionability addresses the existence of overly harsh or one-sided terms(Id.)   

Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165)Both, however, need not be present to the same degreeA sliding scale is applied so that the “more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1317; see also A & M Produce Co., 135 Cal.App.3d at 486.)   
Here, while there is unequal bargaining power between the parties, there is no lack of disclosure of the arbitration agreement(Robinson v. City of Mateca (2000) 78 Cal.App.4th 452, 459 (“Procedural unconscionability requires an inequality in bargaining power accompanied by lack of disclosure of material provisions.”)  There are two references to the arbitration provision in the lease agreementOne contains only two simple, clear sentencesThe parties agree that any unresolved disputes shall be submitted to arbitration in accordance with the Arbitration clause (Section 52)By initialing this section, I am confirming that I have read this section and the Arbitration clause, including the method of opting out of arbitration.”  (Id.The other provision appears under the prominent heading “ARBITRATION: PLEASE READ THIS SECTION CAREFULLY.”  (Ex. 1 to Hartmann Decl.)   

In any event, “a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469.)   We now address whether the Agreement is substantively unconscionable. 

“Substantive unconscionability focuses on the one-sidedness or overly harsh effect of the contract term or clause.”  (Harper, 113 Cal.App.4th at 1406-1407.)  The agreement’s terms are not one-sidedThe agreement states that either party is bound to arbitrate the disputes:  The parties agree that any unresolved disputes shall be submitted to arbitration in accordance with the Arbitration clause (Section 52).  (Ex. 1 to Hartmann Decl.)  “You, HONDA or any involved third party may pursue a Claim.”  (Id.)  “‘Claim’ means any dispute between YOU, HONDA or any involved third party relating to your account, this Lease or our relationship including any application, the Vehicle, its performance and any representations, omissions or warranties.”  (Id.) “YOU or HONDA may select arbitration with American Arbitration Association, JAMS or National Arbitration and Mediation.”  (Id.) 

Plaintiff also argues that the arbitration provision is unenforceable on public policy grounds because it impedes the enforcement of the Song-Beverly Act.  Plaintiffs do not cite any authority, and the Court has found none, that holds that enforcement of an otherwise valid arbitration clause is somehow against public policy merely because the claims are brought under the Song-Beverly Act.  Numerous cases have been brought before the California Courts of Appeal dealing with arbitration clauses in Song-Beverly Act claims, and the courts have not refused to enforce them on the ground the claims involve the Song-Beverly Act.  Plaintiff’s position cannot be reconciled with the existing body of case law compelling arbitration in Song-Beverly cases.¿ (See, e.g.,¿Fikhman v. BMW of N. Am. LLC (C.D. Cal. Oct. 15, 2019) 2019 U.S. Dist. LEXIS 216891, 2019 WL 6721626, at *3¿(order granting motion to compel arbitration in Song-Beverly case);¿Min Soon Lee v. BMW of N. Am., LLC (C.D. Cal. Apr. 10, 2020) 2020 U.S. Dist. LEXIS 87160, 2020 WL 2405253, at *5¿(same); Vargas-Lopez v. Hyundai Motor Am. (C.D. Cal. Feb. 13, 2023) 2023 U.S. Dist. LEXIS 24935¿*¿at *21 (same).) 

In sum, the Court finds that there is no procedural or substantive unconscionability. 

Stay of Proceedings 

Code Civ. Proc. §1281.4 provides that if the court has ordered the arbitration of a controversy, it “shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”  Pursuant to Section 1281.4, therefore, the Court stays this action pending conclusion of the arbitration proceedings.    

CONCLUSION 

For the foregoing reasons, the Court GRANTS AMHC’s motion to compel arbitration and issues a stay of the proceedings pending completion of the arbitration. 

 

DATED: June 14, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court 


Case Number: 23SMCV01939    Hearing Date: June 13, 2024    Dept: 205

Superior Court of California 

County of Los Angeles – West District 

Beverly Hills Courthouse / Department 205 

 

 

A&M ENGINEERING, INC.,  

  

Plaintiff, 

v. 

 

CHRISTOPHER KLEIN, et al.,  

 

Defendants. 

 

  Case No.:  23SMCV04468 

  

  Hearing Date:  June 13, 2024 

  

 

  [TENTATIVE] ORDER RE: 

  PLAINTIFF’S MOTIONS TO COMPEL  

  FURTHER RESPONSES TO FORM  

  INTERROGATORIES AND REQUESTS  

  FOR PRODUCTION OF DOCUMENTS  

  FROM DEFENDANT SCOTT SMITH AND  

  REQUEST FOR MONETARY SANCTIONS 

 

 

 

 

   

 

 

BACKGROUND 

 

Plaintiff A&M Engineering Inc. sued Defendant Scott Smith and eight other named defendants in September 2023.  A&M claims it lost over $13 million in what it alleges was a Ponzi scheme carried out by Smith and others.  Smith, who served as CFO of A&M until January 2023 and concurrently served as CFO of Stelaro, signed a written confession in January 2023 admitting that he had embezzled over $1 million from Stelaro, the entity at the heart of the alleged fraud.   

A&M’s causes of action against Smith do not stem from Smith’s admitted embezzlement from Stelaro, but instead from his participation in the alleged Ponzi scheme (First Amended Complaint (“FAC”), ¶¶ 119–173) and his breaches of fiduciary duties owed to A&M as its CFO (id., ¶¶ 194–198).  

Smith answered the FAC with a general denial of all allegations against him and specifically denied that A&M had been damaged Smith also asserted 30 affirmative defenses, including failure to mitigate damages; unclean hands; “ratification and consent”; “good faith”; “no false, true, or misleading misrepresentations”; “no reliance by reasonable person”; “no unfair conduct”; “lack of damages”; “justification”; waiver; equitable estoppel; “no fraudulent conduct”; “lack of criminal intent”; apportionment; third party apportionment; “acts of third parties”; “assumption of risk”; and “intervening/superseding cause.”   

On December 22, 2023, A&M served Smith with form interrogatories, special interrogatories, requests for production, and a request for admission(Dunn Decl., ¶ 5, Exs. B, C.)  Smith provided responses to each set on January 23, 2024(Dunn Decl., ¶ 7, Exs. D, E.) Smith asserted an objection based on his Fifth Amendment rights against self-incrimination in response to several of the form interrogatories and each of the 27 requests for production: “Responding Party further objects to this Request on the grounds of Responding Party’s Fifth Amendment privilege against self-incrimination.” (E.g., Ex. E to Dunn Decl., RFP No. 1.)  Smith also asserted other objections, including that some of the discovery requests were vague, ambiguous, and overbroad, and that the discovery was “premature.”  (Id.) 

There are five form interrogatories (“FROG”) at issue: 

  • FROG No. 12.1: State the name, ADDRESS, and telephone number of each individual: (a) who witnessed the INCIDENT or the events occurring immediately before or after the INCIDENT; (b) who made any statement at the scene of the INCIDENT; (c) who heard any statements made about the INCIDENT by any individual at the scene; and (d) who YOU OR ANYONE ACTING ON YOUR BEHALF claim has knowledge of the INCIDENT (except for expert witnesses covered by Code of Civil Procedure section 2034). 

 

  • FROG No. 14.1: Do YOU OR ANYONE ACTING ON YOUR BEHALF contend that any PERSON involved in the INCIDENT violated any statute, ordinance, or regulation and that the violation was a legal (proximate) cause of the INCIDENT? If so, identify the name, ADDRESS, and telephone number of each PERSON and the statute, ordinance, or regulation that was violated. 

 

  • FROG No. 15.1: Identify each denial of a material allegation and each special or affirmative defense in your pleadings and for each: (a) state all facts upon which you base the denial or special or affirmative defense; (b) state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of those facts; and (c) identify all DOCUMENTS and other tangible things that support your denial or special or affirmative defense, and state the name, ADDRESS, and telephone number of the PERSON who has each DOCUMENT. 

 

  • FROG No. 16.1: Do you contend that any PERSON, other than you or plaintiff, contributed to the occurrence of the INCIDENT or the injuries or damages claimed by plaintiff? If so, for each PERSON: (a) state the name, ADDRESS, and telephone number of the PERSON; (b) state all facts upon which you base your contention; (c) state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of the facts; and (d) identify all DOCUMENTS and other tangible things that support your contention and state the name, ADDRESS, and telephone number of the PERSON who has each DOCUMENT or thing. 

 

  • FROG No. 16.2: Do you contend that plaintiff was not injured in the INCIDENT? If so: (a) state all facts upon which you base your contention; (b) state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of the facts; and (c) identify all DOCUMENTS and other tangible things that support your contention and state the name, ADDRESS, and telephone number of the PERSON who has each DOCUMENT or thing. 

 

There are 17 requests for productions (“RFPs”) at issue: 

  • RFP No. 1: All COMMUNICATIONS between YOU and BELJAK that RELATE TO STELARO or GAS. 

 

  • RFP No. 2: All COMMUNICATIONS between YOU and AME that RELATE TO STELARO or GAS. 

 

  • RFP No. 3: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO AME. 

 

  • RFP No. 4: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO BELJAK. 

 

  • RFP No. 5: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO INSTANT INFOSYSTEMS.  

 

  • RFP No. 6: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO DAVID KLEIN. 

 

  • RFP No. 7: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO CKE. 

 

  • RFP No. 10: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO LOANS GAS or STELARO received from anyone. 

 

  • RFP No. 11: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO LOAN OFFERS between GAS or STELARO and anyone. 

 

  • RFP No. 14: All COMMUNICATIONS between YOU and DAVID KLEIN that RELATE TO STELARO or GAS. 

 

  • RFP No. 15: All COMMUNICATIONS between YOU and DAVID KLEIN that RELATE TO CHRISTOPHER KLEIN. 

 

  • RFP No. 21: All DOCUMENTS, including but not limited to COMMUNICATIONS, that RELATE TO the Promissory Note between GAS and AME attached to the FIRST AMENDED COMPLAINT as Exhibit A. 

 

  • RFP No. 22: All DOCUMENTS, including but not limited to COMMUNICATIONS, that RELATE TO the Promissory Note between STELARO and AME attached to the FIRST AMENDED COMPLAINT as Exhibit B. 

 

  • RFP No. 24: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOANS GAS or STELARO received from AME YOU did not produce in response to Request for Production Nos. 21, 22, or 23. 

 

  • RFP No. 25: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOANS GAS or STELARO received from BELJAK. 

 

  • RFP No. 26: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOAN OFFERS between GAS or STELARO and AME. 

 

  • RFP No. 27: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOAN OFFERS between GAS or STELARO and BELJAK. 

 

This hearing is on A&M’s motion to compel Smith to provide further responses to form interrogatories and requests for production of documentsPlaintiff also seeks monetary sanctions.  A&M argues Smith’s Fifth Amendment Objections are baseless because (1) Smith has not provided sufficient factual information to allow the Court or A&M to evaluate the merits of the Fifth Amendment privilege claim; (2) Smith’s Fifth Amendment objections apply only to information that could tend to incriminate him, not all information he possesses about a case; (3) the Fifth Amendment protects only compelled testimony of previously unknown facts not production of documents in Smith’s possession which he voluntarily prepared; and (4) Smith has waived his Fifth Amendment protections as to all matters relevant to the 30 affirmative defenses he asserts.          

MEET AND CONFER 

A¿motion to compel further responses must be accompanied by a¿meet and confer declaration pursuant to¿Code Civ. Proc. § 2016.040.¿ (Cal. Civ. Proc. Code §§ 2030.300(b)(1),¿2031.310(b)(1).)¿  A meet and¿confer declaration in support of a motion must show “a reasonable and good faith attempt at an informal¿resolution of each issue presented by the motion.” ¿(Id.¿§ 2016.040.)  The meet and confer requirement is designed to encourage the parties to work out their differences informally so as to avoid the necessity for a formal order.¿ (Stewart v. Colonial W. Agency, Inc.¿(2001) 87 Cal.App.4th 1006, 1016.)  There must be a serious effort at negotiation and informal resolution.¿ (Clement v. Alegre¿(2009) 177 Cal.App.4th 1277, 1294.) 

Here, A&M sent a meet and confer letter to Smith on January 31, 2024, seeking supplemental responses to the form and special interrogatories and requests for production(Dunn Decl., Ex. F.)  Smith responded by letter on February 9 (Dunn Decl., Ex. G), and AME sent a further letter on February 14 (Dunn Decl., Ex. H) before a telephonic meet and confer on February 15 (Dunn Decl., ¶ 11).  The meet and confer efforts did not resolve the parties’ differences, so A&M noticed an informal discovery conference (“IDC”) for March 27. (Dunn Decl., ¶ 11, Ex. I.)  At the March 27 IDC, the parties did not resolve their dispute, and the Court permitted A&M to move to compel further responses(Dunn Decl., ¶ 13.)   

On these facts, the Court concludes A&M has satisfied its meet and confer obligations.   

LEGAL STANDARD 

A party may propound interrogatories on, among other topics: (1) any matter relevant to the subject matter of the pending action; (2) any matter that either is itself admissible or which appears reasonably calculated to lead to the discovery of admissible evidence; and (3) the identity and location of persons having knowledge of discoverable matter. (Code Civ. Proc., §§ 2017.010; 2030.010, subd. (a).) Interrogatories may pertain to whether a party is making a certain contention and the facts, witnesses, and writings upon which that contention is based. (Code Civ. Proc., § 2030.010, subd. (b).)  

A party may move to compel further responses to interrogatories when the answer to an interrogatory is evasive or incomplete or where an objection to an interrogatory is without merit or too general. (Code Civ. Proc., § 2030.300, subds. (a)(1), (a)(3).)  A party responding to interrogatories with objections bears the burden of justifying its objections in response to a motion to compel further responses. (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255.)  

Parties may request production of documents that pertain to, among other things: (1) any matter relevant to the subject matter of the pending action; and (2) any matter that either is itself admissible or which appears reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., §§ 2017.010; 2031.010, subd. (a).)   

A party may move to compel further responses to requests for production when a statement of compliance with the demand is incomplete or when an objection to the request is without merit or too general. (Code Civ. Proc., § 2031.310, subds. (a)(1), (a)(3).)  A party moving to compel further responses to requests must set forth specific facts showing good cause justifying the discovery sought by the demand. (Id., subd. (b)(1).)   

EVIDENTIARY OBJECTIONS 

The Court sustains Objection Nos. 1-3 to the Declaration of Thomas Dreblow. 

DISCUSSION 

Good Cause 

Smith argues that A&M has failed to show good cause for the discovery it seeks because the documents it seeks can be obtained from another partyThe Court disagrees in part.     

Contrary to Smith’s argument, A&M is not¿required to provide¿good cause to compel further responses to¿form interrogatoriesSuch cause is only¿required in motions to compel further responses to requests for production of documents(Compare¿Code Civ. Proc., §§ 2030.300,¿2031.310, subd. (b)(1).) 

As to the document requests, A&M has not met its burden to show good causeTo establish good cause, the burden is on the moving party to demonstrate both: (1) relevance to the subject matter (e.g., how the information in the documents would tend to prove or disprove some issue in the case); and (2) specific facts justifying discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial).  (Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224;¿Glenfed Develop. Corp. v. Sup.Ct. (1997) 53 Cal.App.4th 1113, 1117.)    

Arguments made in the moving papers or in a¿separate statement are insufficient to satisfy this requirement;¿good cause must be shown by way of admissible evidence, such as by¿declaration. (Calcor Space Facility, Inc. v. Superior Court¿(1997) 53 Cal.App.4th 216, 224¿(motion to compel production of documents must be supported by factual evidence by way of declarations setting forth specific facts justifying each category of materials sought to be produced; arguments in a separate statement or in briefs are insufficient).)  

The declaration submitted by A&M does not set forth facts justifying each category of documents sought to be produced(See generally Dunn Decl.)  It merely references attached exhibits, describes the parties’ meet and confer efforts, and attests to the fees incurred in preparing the motion or to be incurred in preparing the reply and attending the hearing on the motion.  Because A&M has not provided evidence to support its claim for good cause, there is no basis to grant its motion to compel production of documents.  The remainder of this Order will, therefore, focus on the motion to compel form interrogatories.         

Fifth Amendment Objection 

A party may invoke his Fifth Amendment rights to refuse to respond to discovery on “any matter that may tend to incriminate him.  (Cal. Evid. Code §940.)  Smith has objected to four form interrogatories on Fifth Amendment groundsHis Fifth Amendment objections are without merit for four reasons: 

First, a party is not entitled to decide for himself¿whether he is protected by the Fifth Amendment privilegeThis question is for the court to decide after conducting a “particularized inquiry,” deciding, in connection with each specific area that the questioning party seeks to explore, whether or not the privilege is well-founded. (Warford v. Medeiros¿(1984) 160 Cal. App. 3d 1035, 1045.)  

A blanket¿refusal to testify is unacceptable; a person claiming the Fifth Amendment privilege must do so with specific reference to particular questions asked or other evidence soughtOnce this is done, the trial court must undertake a particularized inquiry with respect to each specific claim of privilege to determine whether the claimant has established that the testimony or other evidence sought might tend to incriminate him.  (Id.)¿ The burden is on the party invoking the privilege to show that the testimony¿or other evidence could¿tend to incriminate him or her.  (Id.) 

The only factual basis Smith has provided for his Fifth Amendment objections is that the requested discovery would furnish a “link in the chain of evidence” connecting him to embezzlement from Stelaro(Opp. at 6-7.)  But none of A&M’s discovery requests touch on Smith’s embezzlementA&M’s discovery requests focus on loans Stelaro obtained from A&M.  Smith argues that answering A&M’s discovery could allow A&M to “gather evidence potentially damaging” to him (Opp. at 7), but there is no exception in the discovery statutes for information that is harmful to a party’s defense. 

Smith argues that he may be prosecuted for the actions A&M alleges.  (Opp. at 7.)  But every fraud case could potentially be prosecuted as a crime, so Smith’s argument amounts to a discovery exemption for defendants in fraud cases.  No such exemption exists.  Without a better explanation from Smith as to how A&M’s form interrogatories implicate him, the Court cannot undertake the “particularized inquiry” necessary to determine whether the Fifth Amendment applies.  (Warford, 160 Cal.App.3d at 1045 & fn. 8.)  

Second, Smith’s Fifth Amendment objections apply only to information that could tend to incriminate him, not all information he possesses about the case(In re Marriage of Sachs (2002) 95 Cal.App.4th 1144, 1151–1152.)  Form Interrogatories 12.1, 14.1, 16.1, and 16.2 do not seek information about Smith and thus have no tendency to implicate him.  These interrogatories instead ask Smith to provide information about other people who may have witnessed the incidents at issue in this case (FROG No. 12.1), other people who may have violated the law (FROG No. 14.1), other people who may have caused A&M’s injuries (FROG No. 16.1) and whether A&M was injured (FROG No. 16.2).  

Third, Smith asserts 30 affirmative defenses, on which he has the burden of proof. (Dunn Decl., Ex. A.)  Many of these affirmative defenses include factual allegations.  For example, Smith alleges A&M failed to prevent, or caused, the damage.  Smith also alleges A&M consented to his actions, and his actions were lawful and justified Smith further alleges A&M “has sustained no damages by reason of any act or omission by this answering Defendant.”  He also alleges third parties caused A&M’s damage.  

By asserting 30 affirmative defenses and inserting affirmative factual allegations into this case, Smith has waived any Fifth Amendment privilege that applies to evidence on these issues. “[A] party who affirmatively tenders an issue waives its privilege as to evidence relevant to that issue.” (Popelka, Allard v. Superior Court (1980) 107 Cal.App.3d 496, 502–503.)  It would be “manifestly unfair” to allow Smith to assert factual allegations but object on Fifth Amendment grounds to A&M’s discovery requests on the same topics.  (Fuller v. Superior Court (2001) 87 Cal.App.4th 299, 306; see also Transamerica Title Ins. Co. v. Superior Court (1987) 188 Cal.App.3d 1047, 1053 (the deliberate injection of the advice of counsel into a case waives the attorney-client privilege as to communications and documents relating to the advice”).)  Simply put, Smith cannot use the Fifth Amendment as a sword and a shield. 

 Fourth, the Fifth Amendment “may only be invoked when the threat of criminal prosecution is reasonably particular and apparent.”  (U.S. v. Antelope (9th Cir. 2005) 395 F.3d 1128, 1134.)  The Court must order a party to respond unless the person asserting a Fifth Amendment privilege “demonstrates that his or her fear of prosecution is reasonable and not advanced fancifully or merely imagined.”  (Warford v. Medeiros (1984) 160 Cal.App.3d 1035, 1048.)  Here, Smith concedes there is no pending criminal investigation (Opp. at 7), much less an actual prosecutionHe refers only to A&M’s principal’s stated “goal” of seeing him prosecuted (Opp. at 7), which does not create a credible threat of prosecution as there is no evidence the principal has any ability to have Smith prosecuted.   

Troy v. Superior Court (1986) 186 Cal.App.3d 1006 is instructive. There, a judgment debtor, who had already served time in prison for committing fraud, resisted discovery propounded by a receiver trying to collect funds for the victims of the fraud scheme.  (Id. at 1009-1010.)  The judgment debtor refused to respond, citing his Fifth Amendment rights and fear of further prosecution based on the fraud claims of other victimsThe Court of Appeal found the objections to be baseless, as the debtor was not facing criminal prosecution or investigation and had not substantiated a reasonable fear of further prosecution.  (Id. at 1011–1013.)   

Here, Smith admits he has never faced any sort of criminal investigation related to Stelaro, and thus his Fifth Amendment objection is even weaker than the judgment debtor’s in Troy.  Were we to accept Smith’s argument, a defrauder who makes it big can always be cloaked and immune because theres always, quote, somebody out there who can come around and initiate a prosecution.  (Id. at 1013.)  Smith’s fear of inadvertently providing information which might cause him to be prosecuted is based upon pure speculation, and not the existence of the real danger which must exist for Smith to properly invoke the Fifth Amendment privilege. 

Form Interrogatory No. 15.1 

Form Interrogatory 15.1 requests that, for his general denial and for each of the 30 affirmative defenses he asserts, Smith: (1) state all facts upon which he bases his denial or defense; (2) identify all persons with knowledge of those facts; and (3) identify all documents that support the denial or defense.   

Smith does not object to this form interrogatory on Fifth Amendment grounds.  Instead, Smith refuses to provide a substantive response, arguing that his general denial and 30 affirmative defenses are intended to “preserve” his defenses and that his affirmative defenses “are or may become relevant as discovery and investigation reveal more information.” (Dunn Decl., Ex. D at Form Rog 15.1.)  

Smith’s refusal to provide a substantive response is not defensible.  He claims this form interrogatory is “vague, ambiguous, and overbroad in time and scope,” but this is a common form interrogatory the Judicial Council has approved.  He argues the form interrogatory seeks privileged information and work product, but facts, witnesses, and documents supporting his pleadings are the proper subject of interrogatories and are not privileged.  (Code Civ. Proc., § 2030.010, subd. (b).)  He claims this form interrogatory is “premature” because the case is “in its early stages,” but A&M is entitled to propound discovery 10 days after Smith appears. (Code Civ. Proc., § 2030.020, subd. (b).)  A&M is entitled to all facts that Smith can identify after reasonable and good faith efforts on which he asserted his general denial and each of his 30 defenses. (Code Civ. Proc., § 2030.220, subd. (c).) 

Other Objections 

Besides his Fifth Amendment objections, Smith asserts several other objections throughout his responses to A&M’s form interrogatories.  They have no merit.   

First, Smith objects to the term “INCIDENT” as used in form interrogatories as “vague, ambiguous, and overbroad.” Courts do not sustain objections to interrogatories on the grounds they are ambiguous unless the question is totally unintelligible.  Instead, the answering party owes a duty to respond as best he can in good faith.  (See Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783 (“where the question is somewhat ambiguous, but the nature of the information sought is apparent, the proper solution is to provide an appropriate response”).)  

The form interrogatories define “INCIDENT” as Defendants’ solicitation, procurement, and performance of short-term loans from A&M beginning January 1, 2019. (Ex. B to Dunn Decl., at 2.)  This definition is not totally unintelligible.  The definition of “INCIDENT” is also not overbroad.   

Second, Smith objects that the form interrogatories are burdensomeTo sustain an objection to an interrogatory on the grounds it is too burdensome, the responding party must show, with evidence, that the burden of answering is so unjust as to amount to oppression. (West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 417.)  Smith has not explained why responding to form interrogatories regarding his involvement in a handful of loans from A&M to Stelaro amounts to oppression.  A&M defines “INCIDENT” to include conduct stretching over four years, but that period matches the duration of Defendants’ alleged misconduct, which began in early 2019 and continued through early 2023 A&M cannot reasonably narrow this definition given the allegations of this case.  

Third, Smith objects to the form interrogatories as seeking “premature disclosure of expert opinion” and as “premature as the case is only in its early stages of investigation and discovery.” A&M’s form interrogatories do not seek expert opinions; rather, they seek, among other things, the factual bases for Smith’s contentions (FROG Nos. 16.1, 16.2). These topics are plainly within the scope of non-expert discovery. (Code Civ. Proc., §§ 2017.010, 2030.010, subds. (a), (b).)  A plaintiff may serve interrogatories on a defendant 10 days after that defendant is served or appears in the case. (Code Civ. Proc., § 2030.020, subd. (b).)  Parties responding to those interrogatories must undertake a reasonable and good faith effort to obtain all information requested in an interrogatory from parties under his control. (Code Civ. Proc., § 2030.220, subd. (c); Deyo, 84 Cal.App.3d at 782.)  Smith answered the First Amended Complaint in November 2023, so discovery served in late December is not premature. (Dunn Decl., Exs. A, B, C.)  If, after undertaking a reasonable and good faith effort to obtain responsive information, Smith has no such information, A&M is entitled to a verified response saying so  

Sanctions 

The Court shall impose a monetary sanction against a party that unsuccessfully opposes a motion to compel further responses to interrogatories or requests for production unless it finds that the opposing party acted with substantial justification or other circumstances make the imposition of the sanction unjust(Code Civ. Proc., §§ 2030.290, subd. (c); 2031.300, subd. (c).)  The parties make dueling requests for sanctions.   

The Court concludes that sanctions are not warrantedWhile ultimately unsuccessful, Smith had substantial justification to invoke his Fifth Amendment rightsSmith also prevailed on the motion to compel requests for document production.  As to A&M, the Court concludes its motion to compel was well supported by the law and facts, and its failure to prevail on its motion to compel requests for production was due to a procedural defect.   

Stay 

Smith asks the Court to stay discoveryGiven that there is no credible threat of prosecution as discussed above, the Court concludes that a stay is not warranted.   

Smith’s reliance on Pacers, Inc. v. Superior Court (1984) 162 Cal.App.3d 686, is misplacedThere, the Court of Appeal found that the defendants, who were facing the threat of criminal prosecution for the “same facts as the civil action,” were entitled to a stay of discovery because of the very real threat of criminal prosecution.  (Id. at 688–689.)  The defendants had been in a fight with DEA agents, leading the U.S. Attorney for the Southern District of California to seek indictments of the defendants. (Id. at 687.)  The grand jury rejected the indictments, but the U.S. Attorney maintained an “open file” on the case. (Id.)  In those specific factual circumstances, the Court of Appeal found a stay of discovery until the expiration of the relevant statute of limitations was warranted (Id. at 688–689.)  

Here, Smith admits that no prosecutor is seeking his indictment, and he further admits there is “no currently pending criminal investigation”. (Opp. at 7.)  The only issue Smith identifies on which he may face prosecution is his admitted embezzlement from Stelaro. (Opp. at 7.)  None of A&M’s discovery requests ask about his embezzlement, 

CONCLUSION 

Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion to compel further responses to form interrogatories and requests for production and request for sanctions.   

 

IT IS SO ORDERED. 

 

DATED: June 13, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court 


Case Number: 23SMCV04468    Hearing Date: June 13, 2024    Dept: 205

 

 

 

 Superior Court of California 

County of Los Angeles – West District 

Beverly Hills Courthouse / Department 205 

 

 

A&M ENGINEERING, INC.,  

  

Plaintiff, 

v. 

 

CHRISTOPHER KLEIN, et al.,  

 

Defendants. 

 

  Case No.:  23SMCV04468 

  

  Hearing Date:  June 13, 2024 

  

 

  [TENTATIVE] ORDER RE: 

  PLAINTIFF’S MOTIONS TO COMPEL  

  FURTHER RESPONSES TO FORM  

  INTERROGATORIES AND REQUESTS  

  FOR PRODUCTION OF DOCUMENTS  

  FROM DEFENDANT SCOTT SMITH AND  

  REQUEST FOR MONETARY SANCTIONS 

 

 

 

 

   

 

 

BACKGROUND 

 

Plaintiff A&M Engineering Inc. sued Defendant Scott Smith and eight other named defendants in September 2023.  A&M claims it lost over $13 million in what it alleges was a Ponzi scheme carried out by Smith and others.  Smith, who served as CFO of A&M until January 2023 and concurrently served as CFO of Stelaro, signed a written confession in January 2023 admitting that he had embezzled over $1 million from Stelaro, the entity at the heart of the alleged fraud.   

A&M’s causes of action against Smith do not stem from Smith’s admitted embezzlement from Stelaro, but instead from his participation in the alleged Ponzi scheme (First Amended Complaint (“FAC”), ¶¶ 119–173) and his breaches of fiduciary duties owed to A&M as its CFO (id., ¶¶ 194–198).  

Smith answered the FAC with a general denial of all allegations against him and specifically denied that A&M had been damaged Smith also asserted 30 affirmative defenses, including failure to mitigate damages; unclean hands; “ratification and consent”; “good faith”; “no false, true, or misleading misrepresentations”; “no reliance by reasonable person”; “no unfair conduct”; “lack of damages”; “justification”; waiver; equitable estoppel; “no fraudulent conduct”; “lack of criminal intent”; apportionment; third party apportionment; “acts of third parties”; “assumption of risk”; and “intervening/superseding cause.”   

On December 22, 2023, A&M served Smith with form interrogatories, special interrogatories, requests for production, and a request for admission(Dunn Decl., ¶ 5, Exs. B, C.)  Smith provided responses to each set on January 23, 2024(Dunn Decl., ¶ 7, Exs. D, E.) Smith asserted an objection based on his Fifth Amendment rights against self-incrimination in response to several of the form interrogatories and each of the 27 requests for production: “Responding Party further objects to this Request on the grounds of Responding Party’s Fifth Amendment privilege against self-incrimination.” (E.g., Ex. E to Dunn Decl., RFP No. 1.)  Smith also asserted other objections, including that some of the discovery requests were vague, ambiguous, and overbroad, and that the discovery was “premature.”  (Id.) 

There are five form interrogatories (“FROG”) at issue: 

  • FROG No. 12.1: State the name, ADDRESS, and telephone number of each individual: (a) who witnessed the INCIDENT or the events occurring immediately before or after the INCIDENT; (b) who made any statement at the scene of the INCIDENT; (c) who heard any statements made about the INCIDENT by any individual at the scene; and (d) who YOU OR ANYONE ACTING ON YOUR BEHALF claim has knowledge of the INCIDENT (except for expert witnesses covered by Code of Civil Procedure section 2034). 

 

  • FROG No. 14.1: Do YOU OR ANYONE ACTING ON YOUR BEHALF contend that any PERSON involved in the INCIDENT violated any statute, ordinance, or regulation and that the violation was a legal (proximate) cause of the INCIDENT? If so, identify the name, ADDRESS, and telephone number of each PERSON and the statute, ordinance, or regulation that was violated. 

 

  • FROG No. 15.1: Identify each denial of a material allegation and each special or affirmative defense in your pleadings and for each: (a) state all facts upon which you base the denial or special or affirmative defense; (b) state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of those facts; and (c) identify all DOCUMENTS and other tangible things that support your denial or special or affirmative defense, and state the name, ADDRESS, and telephone number of the PERSON who has each DOCUMENT. 

 

  • FROG No. 16.1: Do you contend that any PERSON, other than you or plaintiff, contributed to the occurrence of the INCIDENT or the injuries or damages claimed by plaintiff? If so, for each PERSON: (a) state the name, ADDRESS, and telephone number of the PERSON; (b) state all facts upon which you base your contention; (c) state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of the facts; and (d) identify all DOCUMENTS and other tangible things that support your contention and state the name, ADDRESS, and telephone number of the PERSON who has each DOCUMENT or thing. 

 

  • FROG No. 16.2: Do you contend that plaintiff was not injured in the INCIDENT? If so: (a) state all facts upon which you base your contention; (b) state the names, ADDRESSES, and telephone numbers of all PERSONS who have knowledge of the facts; and (c) identify all DOCUMENTS and other tangible things that support your contention and state the name, ADDRESS, and telephone number of the PERSON who has each DOCUMENT or thing. 

 

There are 17 requests for productions (“RFPs”) at issue: 

  • RFP No. 1: All COMMUNICATIONS between YOU and BELJAK that RELATE TO STELARO or GAS. 

 

  • RFP No. 2: All COMMUNICATIONS between YOU and AME that RELATE TO STELARO or GAS. 

 

  • RFP No. 3: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO AME. 

 

  • RFP No. 4: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO BELJAK. 

 

  • RFP No. 5: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO INSTANT INFOSYSTEMS.  

 

  • RFP No. 6: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO DAVID KLEIN. 

 

  • RFP No. 7: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO CKE. 

 

  • RFP No. 10: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO LOANS GAS or STELARO received from anyone. 

 

  • RFP No. 11: All COMMUNICATIONS between YOU and CHRISTOPHER KLEIN that RELATE TO LOAN OFFERS between GAS or STELARO and anyone. 

 

  • RFP No. 14: All COMMUNICATIONS between YOU and DAVID KLEIN that RELATE TO STELARO or GAS. 

 

  • RFP No. 15: All COMMUNICATIONS between YOU and DAVID KLEIN that RELATE TO CHRISTOPHER KLEIN. 

 

  • RFP No. 21: All DOCUMENTS, including but not limited to COMMUNICATIONS, that RELATE TO the Promissory Note between GAS and AME attached to the FIRST AMENDED COMPLAINT as Exhibit A. 

 

  • RFP No. 22: All DOCUMENTS, including but not limited to COMMUNICATIONS, that RELATE TO the Promissory Note between STELARO and AME attached to the FIRST AMENDED COMPLAINT as Exhibit B. 

 

  • RFP No. 24: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOANS GAS or STELARO received from AME YOU did not produce in response to Request for Production Nos. 21, 22, or 23. 

 

  • RFP No. 25: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOANS GAS or STELARO received from BELJAK. 

 

  • RFP No. 26: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOAN OFFERS between GAS or STELARO and AME. 

 

  • RFP No. 27: All DOCUMENTS, including but not limited to COMMUNICATIONS, RELATING TO LOAN OFFERS between GAS or STELARO and BELJAK. 

 

This hearing is on A&M’s motion to compel Smith to provide further responses to form interrogatories and requests for production of documentsPlaintiff also seeks monetary sanctions.  A&M argues Smith’s Fifth Amendment Objections are baseless because (1) Smith has not provided sufficient factual information to allow the Court or A&M to evaluate the merits of the Fifth Amendment privilege claim; (2) Smith’s Fifth Amendment objections apply only to information that could tend to incriminate him, not all information he possesses about a case; (3) the Fifth Amendment protects only compelled testimony of previously unknown facts not production of documents in Smith’s possession which he voluntarily prepared; and (4) Smith has waived his Fifth Amendment protections as to all matters relevant to the 30 affirmative defenses he asserts.          

MEET AND CONFER 

A¿motion to compel further responses must be accompanied by a¿meet and confer declaration pursuant to¿Code Civ. Proc. § 2016.040.¿ (Cal. Civ. Proc. Code §§ 2030.300(b)(1),¿2031.310(b)(1).)¿  A meet and¿confer declaration in support of a motion must show “a reasonable and good faith attempt at an informal¿resolution of each issue presented by the motion.” ¿(Id.¿§ 2016.040.)  The meet and confer requirement is designed to encourage the parties to work out their differences informally so as to avoid the necessity for a formal order.¿ (Stewart v. Colonial W. Agency, Inc.¿(2001) 87 Cal.App.4th 1006, 1016.)  There must be a serious effort at negotiation and informal resolution.¿ (Clement v. Alegre¿(2009) 177 Cal.App.4th 1277, 1294.) 

Here, A&M sent a meet and confer letter to Smith on January 31, 2024, seeking supplemental responses to the form and special interrogatories and requests for production(Dunn Decl., Ex. F.)  Smith responded by letter on February 9 (Dunn Decl., Ex. G), and AME sent a further letter on February 14 (Dunn Decl., Ex. H) before a telephonic meet and confer on February 15 (Dunn Decl., ¶ 11).  The meet and confer efforts did not resolve the parties’ differences, so A&M noticed an informal discovery conference (“IDC”) for March 27. (Dunn Decl., ¶ 11, Ex. I.)  At the March 27 IDC, the parties did not resolve their dispute, and the Court permitted A&M to move to compel further responses(Dunn Decl., ¶ 13.)   

On these facts, the Court concludes A&M has satisfied its meet and confer obligations.   

LEGAL STANDARD 

A party may propound interrogatories on, among other topics: (1) any matter relevant to the subject matter of the pending action; (2) any matter that either is itself admissible or which appears reasonably calculated to lead to the discovery of admissible evidence; and (3) the identity and location of persons having knowledge of discoverable matter. (Code Civ. Proc., §§ 2017.010; 2030.010, subd. (a).) Interrogatories may pertain to whether a party is making a certain contention and the facts, witnesses, and writings upon which that contention is based. (Code Civ. Proc., § 2030.010, subd. (b).)  

A party may move to compel further responses to interrogatories when the answer to an interrogatory is evasive or incomplete or where an objection to an interrogatory is without merit or too general. (Code Civ. Proc., § 2030.300, subds. (a)(1), (a)(3).)  A party responding to interrogatories with objections bears the burden of justifying its objections in response to a motion to compel further responses. (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255.)  

Parties may request production of documents that pertain to, among other things: (1) any matter relevant to the subject matter of the pending action; and (2) any matter that either is itself admissible or which appears reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., §§ 2017.010; 2031.010, subd. (a).)   

A party may move to compel further responses to requests for production when a statement of compliance with the demand is incomplete or when an objection to the request is without merit or too general. (Code Civ. Proc., § 2031.310, subds. (a)(1), (a)(3).)  A party moving to compel further responses to requests must set forth specific facts showing good cause justifying the discovery sought by the demand. (Id., subd. (b)(1).)   

EVIDENTIARY OBJECTIONS 

The Court sustains Objection Nos. 1-3 to the Declaration of Thomas Dreblow. 

DISCUSSION 

Good Cause 

Smith argues that A&M has failed to show good cause for the discovery it seeks because the documents it seeks can be obtained from another partyThe Court disagrees in part.     

Contrary to Smith’s argument, A&M is not¿required to provide¿good cause to compel further responses to¿form interrogatoriesSuch cause is only¿required in motions to compel further responses to requests for production of documents(Compare¿Code Civ. Proc., §§ 2030.300,¿2031.310, subd. (b)(1).) 

As to the document requests, A&M has not met its burden to show good causeTo establish good cause, the burden is on the moving party to demonstrate both: (1) relevance to the subject matter (e.g., how the information in the documents would tend to prove or disprove some issue in the case); and (2) specific facts justifying discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial).  (Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224;¿Glenfed Develop. Corp. v. Sup.Ct. (1997) 53 Cal.App.4th 1113, 1117.)    

Arguments made in the moving papers or in a¿separate statement are insufficient to satisfy this requirement;¿good cause must be shown by way of admissible evidence, such as by¿declaration. (Calcor Space Facility, Inc. v. Superior Court¿(1997) 53 Cal.App.4th 216, 224¿(motion to compel production of documents must be supported by factual evidence by way of declarations setting forth specific facts justifying each category of materials sought to be produced; arguments in a separate statement or in briefs are insufficient).)  

The declaration submitted by A&M does not set forth facts justifying each category of documents sought to be produced(See generally Dunn Decl.)  It merely references attached exhibits, describes the parties’ meet and confer efforts, and attests to the fees incurred in preparing the motion or to be incurred in preparing the reply and attending the hearing on the motion.  Because A&M has not provided evidence to support its claim for good cause, there is no basis to grant its motion to compel production of documents.  The remainder of this Order will, therefore, focus on the motion to compel form interrogatories.         

Fifth Amendment Objection 

A party may invoke his Fifth Amendment rights to refuse to respond to discovery on “any matter that may tend to incriminate him.  (Cal. Evid. Code §940.)  Smith has objected to four form interrogatories on Fifth Amendment groundsHis Fifth Amendment objections are without merit for four reasons: 

First, a party is not entitled to decide for himself¿whether he is protected by the Fifth Amendment privilegeThis question is for the court to decide after conducting a “particularized inquiry,” deciding, in connection with each specific area that the questioning party seeks to explore, whether or not the privilege is well-founded. (Warford v. Medeiros¿(1984) 160 Cal. App. 3d 1035, 1045.)  

A blanket¿refusal to testify is unacceptable; a person claiming the Fifth Amendment privilege must do so with specific reference to particular questions asked or other evidence soughtOnce this is done, the trial court must undertake a particularized inquiry with respect to each specific claim of privilege to determine whether the claimant has established that the testimony or other evidence sought might tend to incriminate him.  (Id.)¿ The burden is on the party invoking the privilege to show that the testimony¿or other evidence could¿tend to incriminate him or her.  (Id.) 

The only factual basis Smith has provided for his Fifth Amendment objections is that the requested discovery would furnish a “link in the chain of evidence” connecting him to embezzlement from Stelaro(Opp. at 6-7.)  But none of A&M’s discovery requests touch on Smith’s embezzlementA&M’s discovery requests focus on loans Stelaro obtained from A&M.  Smith argues that answering A&M’s discovery could allow A&M to “gather evidence potentially damaging” to him (Opp. at 7), but there is no exception in the discovery statutes for information that is harmful to a party’s defense. 

Smith argues that he may be prosecuted for the actions A&M alleges.  (Opp. at 7.)  But every fraud case could potentially be prosecuted as a crime, so Smith’s argument amounts to a discovery exemption for defendants in fraud cases.  No such exemption exists.  Without a better explanation from Smith as to how A&M’s form interrogatories implicate him, the Court cannot undertake the “particularized inquiry” necessary to determine whether the Fifth Amendment applies.  (Warford, 160 Cal.App.3d at 1045 & fn. 8.)  

Second, Smith’s Fifth Amendment objections apply only to information that could tend to incriminate him, not all information he possesses about the case(In re Marriage of Sachs (2002) 95 Cal.App.4th 1144, 1151–1152.)  Form Interrogatories 12.1, 14.1, 16.1, and 16.2 do not seek information about Smith and thus have no tendency to implicate him.  These interrogatories instead ask Smith to provide information about other people who may have witnessed the incidents at issue in this case (FROG No. 12.1), other people who may have violated the law (FROG No. 14.1), other people who may have caused A&M’s injuries (FROG No. 16.1) and whether A&M was injured (FROG No. 16.2).  

Third, Smith asserts 30 affirmative defenses, on which he has the burden of proof. (Dunn Decl., Ex. A.)  Many of these affirmative defenses include factual allegations.  For example, Smith alleges A&M failed to prevent, or caused, the damage.  Smith also alleges A&M consented to his actions, and his actions were lawful and justified Smith further alleges A&M “has sustained no damages by reason of any act or omission by this answering Defendant.”  He also alleges third parties caused A&M’s damage.  

By asserting 30 affirmative defenses and inserting affirmative factual allegations into this case, Smith has waived any Fifth Amendment privilege that applies to evidence on these issues. “[A] party who affirmatively tenders an issue waives its privilege as to evidence relevant to that issue.” (Popelka, Allard v. Superior Court (1980) 107 Cal.App.3d 496, 502–503.)  It would be “manifestly unfair” to allow Smith to assert factual allegations but object on Fifth Amendment grounds to A&M’s discovery requests on the same topics.  (Fuller v. Superior Court (2001) 87 Cal.App.4th 299, 306; see also Transamerica Title Ins. Co. v. Superior Court (1987) 188 Cal.App.3d 1047, 1053 (the deliberate injection of the advice of counsel into a case waives the attorney-client privilege as to communications and documents relating to the advice”).)  Simply put, Smith cannot use the Fifth Amendment as a sword and a shield. 

 Fourth, the Fifth Amendment “may only be invoked when the threat of criminal prosecution is reasonably particular and apparent.”  (U.S. v. Antelope (9th Cir. 2005) 395 F.3d 1128, 1134.)  The Court must order a party to respond unless the person asserting a Fifth Amendment privilege “demonstrates that his or her fear of prosecution is reasonable and not advanced fancifully or merely imagined.”  (Warford v. Medeiros (1984) 160 Cal.App.3d 1035, 1048.)  Here, Smith concedes there is no pending criminal investigation (Opp. at 7), much less an actual prosecutionHe refers only to A&M’s principal’s stated “goal” of seeing him prosecuted (Opp. at 7), which does not create a credible threat of prosecution as there is no evidence the principal has any ability to have Smith prosecuted.   

Troy v. Superior Court (1986) 186 Cal.App.3d 1006 is instructive. There, a judgment debtor, who had already served time in prison for committing fraud, resisted discovery propounded by a receiver trying to collect funds for the victims of the fraud scheme.  (Id. at 1009-1010.)  The judgment debtor refused to respond, citing his Fifth Amendment rights and fear of further prosecution based on the fraud claims of other victimsThe Court of Appeal found the objections to be baseless, as the debtor was not facing criminal prosecution or investigation and had not substantiated a reasonable fear of further prosecution.  (Id. at 1011–1013.)   

Here, Smith admits he has never faced any sort of criminal investigation related to Stelaro, and thus his Fifth Amendment objection is even weaker than the judgment debtor’s in Troy.  Were we to accept Smith’s argument, a defrauder who makes it big can always be cloaked and immune because theres always, quote, somebody out there who can come around and initiate a prosecution.  (Id. at 1013.)  Smith’s fear of inadvertently providing information which might cause him to be prosecuted is based upon pure speculation, and not the existence of the real danger which must exist for Smith to properly invoke the Fifth Amendment privilege. 

Form Interrogatory No. 15.1 

Form Interrogatory 15.1 requests that, for his general denial and for each of the 30 affirmative defenses he asserts, Smith: (1) state all facts upon which he bases his denial or defense; (2) identify all persons with knowledge of those facts; and (3) identify all documents that support the denial or defense.   

Smith does not object to this form interrogatory on Fifth Amendment grounds.  Instead, Smith refuses to provide a substantive response, arguing that his general denial and 30 affirmative defenses are intended to “preserve” his defenses and that his affirmative defenses “are or may become relevant as discovery and investigation reveal more information.” (Dunn Decl., Ex. D at Form Rog 15.1.)  

Smith’s refusal to provide a substantive response is not defensible.  He claims this form interrogatory is “vague, ambiguous, and overbroad in time and scope,” but this is a common form interrogatory the Judicial Council has approved.  He argues the form interrogatory seeks privileged information and work product, but facts, witnesses, and documents supporting his pleadings are the proper subject of interrogatories and are not privileged.  (Code Civ. Proc., § 2030.010, subd. (b).)  He claims this form interrogatory is “premature” because the case is “in its early stages,” but A&M is entitled to propound discovery 10 days after Smith appears. (Code Civ. Proc., § 2030.020, subd. (b).)  A&M is entitled to all facts that Smith can identify after reasonable and good faith efforts on which he asserted his general denial and each of his 30 defenses. (Code Civ. Proc., § 2030.220, subd. (c).) 

Other Objections 

Besides his Fifth Amendment objections, Smith asserts several other objections throughout his responses to A&M’s form interrogatories.  They have no merit.   

First, Smith objects to the term “INCIDENT” as used in form interrogatories as “vague, ambiguous, and overbroad.” Courts do not sustain objections to interrogatories on the grounds they are ambiguous unless the question is totally unintelligible.  Instead, the answering party owes a duty to respond as best he can in good faith.  (See Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783 (“where the question is somewhat ambiguous, but the nature of the information sought is apparent, the proper solution is to provide an appropriate response”).)  

The form interrogatories define “INCIDENT” as Defendants’ solicitation, procurement, and performance of short-term loans from A&M beginning January 1, 2019. (Ex. B to Dunn Decl., at 2.)  This definition is not totally unintelligible.  The definition of “INCIDENT” is also not overbroad.   

Second, Smith objects that the form interrogatories are burdensomeTo sustain an objection to an interrogatory on the grounds it is too burdensome, the responding party must show, with evidence, that the burden of answering is so unjust as to amount to oppression. (West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 417.)  Smith has not explained why responding to form interrogatories regarding his involvement in a handful of loans from A&M to Stelaro amounts to oppression.  A&M defines “INCIDENT” to include conduct stretching over four years, but that period matches the duration of Defendants’ alleged misconduct, which began in early 2019 and continued through early 2023 A&M cannot reasonably narrow this definition given the allegations of this case.  

Third, Smith objects to the form interrogatories as seeking “premature disclosure of expert opinion” and as “premature as the case is only in its early stages of investigation and discovery.” A&M’s form interrogatories do not seek expert opinions; rather, they seek, among other things, the factual bases for Smith’s contentions (FROG Nos. 16.1, 16.2). These topics are plainly within the scope of non-expert discovery. (Code Civ. Proc., §§ 2017.010, 2030.010, subds. (a), (b).)  A plaintiff may serve interrogatories on a defendant 10 days after that defendant is served or appears in the case. (Code Civ. Proc., § 2030.020, subd. (b).)  Parties responding to those interrogatories must undertake a reasonable and good faith effort to obtain all information requested in an interrogatory from parties under his control. (Code Civ. Proc., § 2030.220, subd. (c); Deyo, 84 Cal.App.3d at 782.)  Smith answered the First Amended Complaint in November 2023, so discovery served in late December is not premature. (Dunn Decl., Exs. A, B, C.)  If, after undertaking a reasonable and good faith effort to obtain responsive information, Smith has no such information, A&M is entitled to a verified response saying so  

Sanctions 

The Court shall impose a monetary sanction against a party that unsuccessfully opposes a motion to compel further responses to interrogatories or requests for production unless it finds that the opposing party acted with substantial justification or other circumstances make the imposition of the sanction unjust(Code Civ. Proc., §§ 2030.290, subd. (c); 2031.300, subd. (c).)  The parties make dueling requests for sanctions.   

The Court concludes that sanctions are not warrantedWhile ultimately unsuccessful, Smith had substantial justification to invoke his Fifth Amendment rightsSmith also prevailed on the motion to compel requests for document production.  As to A&M, the Court concludes its motion to compel was well supported by the law and facts, and its failure to prevail on its motion to compel requests for production was due to a procedural defect.   

Stay 

Smith asks the Court to stay discoveryGiven that there is no credible threat of prosecution as discussed above, the Court concludes that a stay is not warranted.   

Smith’s reliance on Pacers, Inc. v. Superior Court (1984) 162 Cal.App.3d 686, is misplacedThere, the Court of Appeal found that the defendants, who were facing the threat of criminal prosecution for the “same facts as the civil action,” were entitled to a stay of discovery because of the very real threat of criminal prosecution.  (Id. at 688–689.)  The defendants had been in a fight with DEA agents, leading the U.S. Attorney for the Southern District of California to seek indictments of the defendants. (Id. at 687.)  The grand jury rejected the indictments, but the U.S. Attorney maintained an “open file” on the case. (Id.)  In those specific factual circumstances, the Court of Appeal found a stay of discovery until the expiration of the relevant statute of limitations was warranted (Id. at 688–689.)  

Here, Smith admits that no prosecutor is seeking his indictment, and he further admits there is “no currently pending criminal investigation”. (Opp. at 7.)  The only issue Smith identifies on which he may face prosecution is his admitted embezzlement from Stelaro. (Opp. at 7.)  None of A&M’s discovery requests ask about his embezzlement, 

CONCLUSION 

Based on the foregoing, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion to compel further responses to form interrogatories and requests for production and request for sanctions.   

 

IT IS SO ORDERED. 

 

DATED: June 13, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court 


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